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When the Government Lends, Taxpayers Pay

The government is heavily involved in lending (through both direct loans and taxpayer-backed guarantees) via education, housing, and dozens of other programs.

The good news is that the subsidy rate for defaults is relatively low (although I would like to see how this compares to private lenders): for FY 2009 the government's total direct loan write-off and guaranteed loan termination subsidy rate is 1.3 percent.

The bad news is that this rate will rise to 1.48 percent in FY 2010 and 2.57 percent in FY 2011.

And worse, although these percentages are small, they represent a lot of money. In FY09 taxpayers ate $30.6 billion in loans and guarantees, and the new budget estimates dollar losses of $38.8 billion in FY10 and $68.9 billion in FY11.

The tax reform package passed by the House and Senate will provide relief to millions of individuals, families, and businesses. Let's take a moment to thank congress for delivering strong tax reform before the end of the year.

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National Taxpayers Union (NTU) is the Voice of America's Taxpayers. NTU mobilizes elected officials and the general public on behalf of tax relief and reform, lower and less wasteful spending, individual liberty, and free enterprise. Founded in 1969, we work at all levels for the day when every taxpaying citizen's right to a limited government is among our nation's highest democratic principles.